Budget Creation and Financial Planning – Great tips for Anyone

Considering the potential for economic disaster that currently looks to be imminent, if you haven’t already created a budget and done some financial planning, this is a great time to start! We are, of course, going to hope for the best, but reasonable people know to prepare for the worst. That’s where financial planning comes in.

Financial Planning and Budget Creation

Ok, I know. Financial planning and budget creation is, not only boring, but seems a little daunting if you’ve never tackled it before. But, hear me out. Boring is ok if it keeps you solvent! Am I right? I’m not talking about checking your stocks and bonds, I’m talking about planning out your money situation so that you make it through a financial hardship without losing everything.

So, Where do you start?

Start from the Starting Point

Its hard to get started if you’ve never really done it before, but I suggest starting from the most basic points. Begin with your basic income. The amount that is for sure. Maybe your income fluctuates somewhat and that’s ok, but it’s hard to budget that way. So start with the amount that you can count on monthly.

Next up is adding your expenses to the mix.

Now right here, I suggest dividing them into at least 3 categories;

• Mandatory (Fixed Expenses) – These are the bills that keep you housed and what not; the ones that happen every month and don’t really change much.
  • mortgage/rent
  • insurance
  • car payment
  • power
  • water, etc.
• Not Mandatory, but nice – These are the bills that you don’t want to get rid of but you could live without if worst comes to worst.
  • cell phone (I know, I know)
  • cable/satellite
  • gym membership
  • internet, etc.
• Variable Expenses (Budget items that aren’t in the ‘bills’) – These are categories of spending that happen throughout the month bit by bit.
  • food/groceries
  • fuel
  • gifts
  • pet care
  • beauty related
  • clothing, etc.

***Important Reminder – This first step, gathering these amounts based on what you are actually spending is the most important part of this step. Once you mesh everything, to see where you are, you can pare down in the necessary areas.

A lot of times, that little exercise right there is enough to fix a lot of problems. People don’t realize how much they actually spend every month on junk because it’s just a few bucks at a time. But it sure adds up!

Ok, so you have gathered all of your income and expenses, now what?

Now, you have to make the income and expenses mesh. Sounds easy enough, but it can be a little tricky, especially if you are working with a paycheck to paycheck situation. The key here is to match income dates with expense dates. I suggest a calendar for this.

If you are paid weekly/biweekly/whatever then you have to fit your bills into those paychecks.

There are a couple of different ways to deal with the due dates.

1. Write all of the due dates on your planner and plan your paychecks from that period to cover those bills. For larger amounts like mortgage or car payments, you may want to divide the amount by the amount of paychecks per month and pull that money aside from each check.
2. You could also potentially negotiate due dates. If you get paid weekly but all of your monthly bills are due on the first, it can get hard. If you are in this situation, negotiating would definitely be worth a shot.

There are quite a few methods out there for budget creation and planning your financial future. I believe you have to find the method that works best for your family; one that you can keep up with. It won’t do you any good if you don’t follow it. Whichever method that you choose, it is very important to get it on paper. When you can physically see where your money is going and how far it is stretched, it honestly does put a different spin on it.

Write it Down!

The Envelope Method

One of my favorite methods for people who are new to budget creation, (or maybe those that have a hard time telling themselves no), is the envelope method. It sounds a little elementary, but it has worked for a lot of people over the years.

The idea is, once you know the numbers from above, you use one envelope for each budget category and you put your budgeted amount of cash in them. That’s how much you get for that category for that month (or week, however you set it up).

When it’s gone, you’re done

I’ll say it again for the people in the back…

When it’s gone…. you are done!!!

Cash in this system is very a good thing, if you don’t cheat. The debit card in your pocket can really get you in trouble. It’s just way too easy and you don’t ‘see’ your balance getting smaller.

My Personal Favorite Method of Budget Creation

I am still using the same method that I have been using for years… (more than I care to announce, to be honest). It has always worked well for me.

*It keeps me on track,

*It keeps me on top of what has been paid and what still has to be paid,

*and I can use this information to help me budget in occasional extra expenses or contribute to and track savings.

The basic idea is that I have monthly sheets where I log and budget all of my fixed and variable expenses. I mark everything off as it is paid and I use it in conjunction with a calendar so that I can plan my bills around my income. I enter my budgeted expenses then when they are paid, I enter the actual expenses. For instance, when my electric bill comes in less than expected, I know how much extra will be there for savings or for additional expenses.

I like my system.

It works for me.

My system also gives me a place for planning my financial goals. Its very important to do this because it gives you something to shoot for. If for no other reason, than the mental and emotional edge that you get from accomplishing that goal.

Goals really are a critical part of the process. There will be a more in depth post on goal setting shortly, but suffice it to say for now that if you set a goal and you are serious about it, then there is a way to map a route to it. I’ll show you. Soon.

Be sure to grab your free copy of our Budget Creation and Financial Planner below!!

Putting a Bow on it

In wrapping this topic up, I am going to leave you with a few additional resources for people who are ready for and/or needing help with budget creation and financial planning. There are a lot of resources out there. You can do this.

Budget creation is literally step number one. Be sure to check back with us for the next steps in the process, like how to cut your expenses back, how to save money in your everyday life and how to effectively set goals.

I HOPE YOU WILL JOIN ME

This is my most recent feed. I wanted this to be separate of my other feeds so that the topics don’t get watered down. This is incredibly important information tied to upcoming decisions that citizens, families will have to make.

I plan to share more of what I learn concerning our current state of affairs as well as a variety of other useful tips and information that could be helpful to families during these increasingly worrisome moments. If you would like to join in my other feeds, like Let’s Just Call It Politics then I welcome you.

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